Friday, September 19, 2014

MAXimizing Utility?

At MaxSpeak, Max responds to comments on his earlier posts on Universal Basic Income.

Bud Meyers wrote:
With ever more robotics and automation putting people out of work, how will they live without a Universal Basic Income, when human labor becomes obsolete?
To which, Max replied:
I totally disagree with the idea that jobs will be displaced by automation. The composition of jobs will change, but there is still quite a bit of useful work to be done. People were talking this way in the 1950s. There is always more automation, and always other kinds of new jobs.
Whoa, Max! You just invoked the lump-of-labor fallacy claim!

Logically, the premise that “there is still quite a bit of useful work to be done” is true by definition. Empirically, the statement is vacuous. That doesn't mean it is untrue, just that it has no empirical content. The effort to fill it with pseudo-content leads inevitably into self-contradiction, as shown by the “dispute” in the 19th century between Cairnes and Thornton over the wages-fund doctrine. See "Ceteris paribus, Dr. Jekyll tans his own Hyde"

The methodological issues here don’t have to do with whether or not there is “work to be done” but with uncertainty, rational expectations and the fundamental assumption of “maximizing utility” (stated by Nassau Senior as “That every man is desirous to obtain, with as little sacrifice as possible, as much as possible of the articles of wealth.”) See my new post "On Deducing Faith and Redemption from Usury with the Help of Automata."

2 comments:

EconoCat said...

Oy. I'd say you're over-thinking this. We observe continuous advance of technology and creation and destruction of jobs. There is no reason of which I am aware it will stop.

Sandwichman said...

Nope. I let Hutchison and Cardinal Newman, Nassau Senior, John Cairnes and William Thornton, A.C. Pigou and Maurice Dobb, Maynard Keynes and Frank Knight do the hard slogging. I'm just skimming the surface.

If you read what I actually wrote instead of assuming I said something I didn't say, you'll notice that I specifically pointed out that "quite a bit of useful work to be done" is not untrue. Just that it is empirically vacuous. Bud Myers's expectation of human labor becoming obsolete is ALSO empirically vacuous, by the way.

My point may be subtle with regard to the trivial "work to be done" claim but there are much bigger methodological fish at stake -- such as utility maximization, equilibrium, perfect expectations and uncertainty.